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Madison Square Garden (MSG) - Get The Madison Square Garden Co. Report shares climbed 1.2% to $287.57 Tuesday after Jefferies initiated coverage of the sports and entertainment company with a buy rating and a $370 price target.

Analyst Khoa Ngo said in a note to investors that Madison Square Garden's prospective spinoff highlights the "previously obscure" asset value, growth potential, and sports betting optionality of both the sports and entertainment entities.

Ngo considers the spinoff as "critical to capturing underappreciated value." The analyst also said the "rapid" growth of experiential leisure entertainment should propel both businesses in unique ways.

Earlier this month, the operator of the iconic Manhattan sports venue officially filed with the Securities and Exchange Commission to spin off its entertainment business.

The plan would separate the National Basketball Association's New York Knicks and National Hockey League's New York Rangers franchises, as well as the Kicks Gaming official NBA 2K esports franchise and the company's professional sports-team training center in Greenburgh, N.Y., from the division that owns the arena where they play, Madison Square Garden.

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MSG's entertainment business includes an outdoor music festival company, a hospitality group, a live entertainment production outfit and concert and entertainment venues.

The company also said it chose to spin off its entire sports asset - as opposed to its previous plan to retain a third of the equity in the separate business - because it decided to push back the opening of its MSG Sphere in London.

CEO James Dolan had said in a statement that the "spinoff would create two distinct companies for MSG shareholders, each with a defined business focus and clear investment characteristics."